History of Planning In India

The Congress Plan:  It was on the initiative of the INC president Subhash C. Bose that the National Planning Committee (NPC) was set up in October 1938 under the chairmanship of J.L. Nehru to work out concrete programmes for development encompassing all major areas of the economy.

The Visvesvaraya Plan

The credit of proposing the first blueprint of Indian planning is given to the popular civil engineer and the ex-Dewan of Mysore state M. Visvesvaraya—in his book The Planned Economy of India, published in 1934.

His ideas of state planning were an exercise in democratic capitalism (similar to the USA) with emphasis on industrialization—a shift of labour from the agrarian set up to the industries targeting to double national income in one decade. Though there was no follow up by the British Government on this plan, it aroused an urge for national planning among the educated citizens of the country. 

The Gandhian Plan

 Espousing the spirit of the Gandhian economic thinking, Sriman Narayan Agarwal formulated this plan in 1944 (Year when Bombay plan was introduced). This plan laid more emphasis on agriculture. Even if he referred to industrialization it was to the level of promoting cottage and village-level industries, unlike the NPC and the Bombay Plan which supported a leading role for the heavy and large industries. The plan articulated a ‘decentralized economic structure’ for India with ‘self-contained villages’.

It needs to be noted here that the Gandhian did not agree with the views of the NPC or the Bombay Plan, particularly on issues like centralised planning, dominant role for state in the economy and the emphasis on industrialization being the major ones.

The People’s Plan

In 1945, yet another plan was formulated by the radical humanist leader M.N. Roy, chairman of the Post-War Reconstruction Committee of Indian Trade Union. The plan was based on Marxist socialism and advocated the need of providing the people with the ‘basic necessities of life’.

Agricultural and industrial sectors, both were equally highlighted by the plan. Many economists have attributed the socialist leanings in Indian planning to this plan. The common minimum programmes of the United Front Government of the mid-nineties (20th century) and that of the United Progressive Alliance of 2004 may also be thought to have been inspired from the same plan. ‘Economic reforms with the human face’, the slogan with which the economic reforms started early 1990s has also the resonance of the People’s Plan.

The Sarvodaya Plan 

After the reports of the NPC were published and the Government was set to go for the five-year Plans, a lone blueprint for the planned development of India was formulated by the famous socialist leader Jaiprakash Narayan—the Sarvodaya Plan published in January 1950.

The plan drew its major inspirations from the Gandhian techniques of constructive works by the community and trusteeship as well as the Sarvodaya concept of Acharya Vinoba Bave, the eminent Gandhian constructive worker.

Major ideas of the plan were highly similar to the Gandhian Plan like emphasis on agriculture, agribased small and cottage industries, self-reliance and almost no dependence on foreign capital and technology, land reforms, self-dependent villages and decentralized participatory form of planning and economic progress, to name the major ones.

Unit Five Year Plans in India

First Plan

The period for this plan was 1951–56. As the economy was facing the problem of large-scale food grains import (1951) and the pressure of price rise, the plan accorded the highest priority to agriculture including irrigation and power projects. About 44.6 per cent of the plan outlay went in favour of the public sector undertakings (PSUs).

The idea of Five Year Plan in India was borrowed from the USSR’s constitution.

Second Plan

The plan period was 1956–61. The strategy of growth laid emphasis on rapid industrialization with a focus on heavy industries and capital goods. The plan was developed by Professor Mahalanobis.

Third Plan

The Plan period was 1961–65. The Plan specifically incorporated the development of agriculture as one of the objectives of planning in India besides for first time considering the aim of balanced, regional development.

Due to heavy drain and diversion of funds, this plan utterly failed to meet its targets.

Three Annual Plans: The period of the three consecutive Annual Plans was 1966–69. Though the Fourth Plan was ready for its implementation in 1966, the weak financial situation as well as the low morale after the defeat by China, the Government decided to go for an Annual Plan for 1966–69.

Due to the same reasons the Government went for another two such plans in the forthcoming years. The broader objectives of these Annual Plans were inside the design of the Fourth Plan which would have been implemented for the period 1966–71 had the financial conditions not worsened by then.

Some economists as well as the opposition in the Parliament called this period as a discontinuity in the planning process, as the Plans were supposed to be for a period of five years. They named it a period of “Plan Holiday”, i.e. the planning was on a holiday. 

Fourth Plan

The Plan period was 1969–74. The Plan was based on the Gadgil strategy with special focus to the ideas of growth with stability and progress towards self-reliance.

Fifth Plan: The Plan (1974–79) has its focus on poverty alleviation and self-reliance. The popular rhetoric of poverty alleviation was sensationalized by the Government.

The planning process got more politicised. The havocs of hyper-inflation led the Government to hand over a new function to the Reserve Bank of India to stabilize the inflation (the function which the RBI carries forward even today). A judicious price wage policy was started to check the menace of inflation on the wage-earners.

The Janata Government did cut-short the Fifth Plan one year ahead of its terminal. A fresh Plan, the Sixth Plan for the period 1978–83 was launched by the new Government which called it the ‘Rolling Plan’.

In 1980, there was again a change of government at the centre with the return of the Congress which abandoned the Sixth Plan of the Janata Government in the year 1980 itself.

The new Government launched a fresh new Sixth Plan for the period 1980–85.

Sixth Plan

This Plan (1980–85) was launched with the slogan of ‘Garibi Hatao’ (alleviate poverty).

Seventh Plan

The basic tenets of planning i.e. growth, modernization, self-reliance and social justice remained as the guiding principles.

Two Annual Plans: The Eighth Plan (whose term would have been 1990–95) could not take off due to the ‘fast-changing political situation at the Centre’. 

Note: In India’s developmental plan exercise we have two types of schemes viz; central sector and centrally sponsored scheme. The nomenclature is derived from the pattern of funding and the modality for implementation. 

Under Central sector schemes, it is 100% funded by the Union government and implemented by the Central Government machinery. Central sector schemes are mainly formulated on subjects from the Union List.

Under Centrally Sponsored Scheme (CSS) a certain percentage of the funding is borne by the States in the ratio of 50:50, 70:30, 75:25 or 90:10 and the implementation is by the State Governments. Centrally Sponsored Schemes are formulated in subjects from the State List to encourage States to priorities in areas that require more attention.

Funds are routed either through consolidated fund of States and or are transferred directly to State/ District Level Autonomous Bodies/Implementing Agencies.